Virtual Economy and Fiscal Crisis

Abstract

High inflation was suppressed, but Russia still faced persistently high fiscal deficits that led to an increasing debt burden. The financial policy of the government remained unsustainable, while the fiscal problems turned out to be much more complex than monetary tightening. The next step after macroeconomic stabilization was the implementation of a package of structural reforms in the fiscal sphere, financial and banking systems, natural monopolies, property rights institutions and so on. All of these reforms were very difficult to implement, time-consuming, and required strong political will and enormous efforts on the part of the authorities.